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Will property prices correct themselves

Created by : Nikhil , Senior Manager, Insurance  | 04 02 2010 02:26:30 +0000
Industry : BankingFunctional Area : Pricing(Sales & Marketing)
Keywords : property prices
Activity:  128 views;  last activity : 07 06 2010 20:18:09 +0000

A lot of people are talking about a correction in prices because the property prices have once again reached close to their peak. They are also arguing that since the interest rates have also started their upward cyclical move, prices are likely to correct

Looking at the demand, an immediate price drop doesn’t look possible. If at all there is a correction, it would be limited to certain pockets

  
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We need to rule out immediate impact of the monetary tightening measures adopted by the Reserve Bank of India on property prices. The banking regulator recently hiked the policy rates, signalling the beginning of an upward trend in interest rates in the country.


A housing loan is essentially for a minimum 10 years. So, it is natural that a customer may see interest rate go up and down during its tenure. But nobody is going to postpone buying a home because interest rates have moved up marginally by quarter percentage.

the market can easily absorb a 50 basis points hike (100 basis points= 1%) at this juncture. If there is a hike of above 1%, there will be a huge impact. The demand would definitely drop significantly and surely a correction in prices would follow.

The real cause for concern is the delivery period. People are taking three to four years to complete a project
By Nikhil , Senior Manager, Insurance  | 04 02 2010 02:26:30 +0000
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